Associations new law
The Associations Incorporation Act 2015 commenced 1 July 2016.
The Act provides a framework of regulation for not-for-profit organisations such as sport and recreation clubs, societies and community groups in Western Australia leaving the internal management of associations largely to the members. Associations are still able to incorporate as a separate legal body and thereby limit the liability of its members for lawful activities.
Key features of the new law
Associations must review and update their rules as well as introducing a number of changes regarding:
- financial reporting,
- the rules and
- membership of incorporated associations
A three–tiered system of financial reporting and accountability requirements based upon the associations revenue has been introduced.
- Tier 1 associations (revenue of less than $250,000) can elect to prepare basic financial statements with no independent review or audit.
- Tier 2 associations (revenue of $250,000 or more, but less than $1,000,000) must prepare financial reports that give a true and fair view of the financial position of the association in accordance with Australian Accounting Standards. Such reports must be reviewed by a member of a professional accounting body.
- Tier 3 associations (revenue of $1,000,000 or more) must prepare financial reports that give a true and fair view of the financial position of the association in accordance with Australian Accounting Standards. Such reports must be audited by a member of a professional accounting body holding a public practicing certificate.
Associations are still required to provide their financial reports to members; however the reports will not be required to also be provided to the Commissioner.
The obligations of committee members has been formalised, which already exist under other laws. These include:
- duty of care and diligence;
- duty to act in the best interests of the association and for a proper purpose; and
- duty not to misuse their position or information
Eligibility requirements are also set out, which prohibit persons from sitting on the management committee where they:
- are an undischarged bankrupt or whose affairs are under insolvency law,
- been convicted with an offence involving fraud or dishonesty punishable on conviction by 3 months or more imprisonment; and
- have been convicted of an offence in connection with the promotion, formation of management of a body corporate, including duties under the new law.
Any person can request the Commissioner's approval to be appointed to the committee.
The protection of privacy of association members has been improved. Access to the membership register continues to be restricted to association members but now the law also limits how the information may be used. Further, a member may provide a post office box or email address for contact instead of a residential address.
Importantly all associations are required to update their rules and either adopt the Model Rules, or adapt their own rules (provided the rules comply with the new law). Incorporated associations will have three years from 1 July 2016 to ensure their rules comply with the new law or adopt the new model rules.
More information is available on the Key Features of the New Model Rules.
Each association is required to include an internal dispute resolution process in its rules. Any unresolved disputes between members of an incorporated association, and incorporated associations and their members can be heard by the State Administrative Tribunal (SAT).
A procedure for the amalgamation of two or more associations into a new incorporated association has been provided under the new law.
Winding up - ending an association
Associations can now choose either a winding up, which is a formal process using a liquidator, or a cancellation of incorporation, which is a simpler process without the need of a liquidator.
Each association is required to give the Commissioner details of its address, and also notify the Commissioner of a change of address within 28 days of it occurring.
Government's Regulatory Impact Assessment Requirements
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Non-incorporated groups, individuals and stakeholders can also be alerted about the new law by subscribing to the AssociationsInfo newsletter.
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